During two closed sessions before the luncheon, committee members discussed the latest in financial regulation issues. At a luncheon briefing following these sessions, SFRC members gave several statements and answered questions.

The Committee believes the Treasury Department'sestablishment of conservatorship for the GSEs must be the beginning and not the end of the reform process. Liquidationoffers the most promising future for the enterprises; it allows taxpayers to benefit from whatever value remains in the companies, but minimizes the risk of continuing government involvement with their activities.

What will the effect be of the FDIC's decision to extend the moratorium on the approval of new applications by nonfinancial companies to charter or acquire ILCs?

In the Committee's view, limiting GSE mortgage portfolios to the amount necessary to facilitate securitization is a good policy.

The Committee sees no good reason for the SEC to intensify the regulation of short selling. Short sales play an important role in our stock markets, allowing investors to express legitimate concerns about accounting irregularities and other reasons for the overvaluation of individual firms.

At this luncheon briefing, the SFRC, a group of independent experts on the financial services industry, issued a statement and answered questions.

Making children spend more time in school is not necessarily proven to generate better results.

The Shadow Financial Regulatory Committee applauds the reaffirmation of the importance of numerical thresholds in the leverage-ratio tests and the associatedprompt corrective actiontriggers.